2. Definitions and Relationships
Corporate social responsibility (CSR) is the
process by which businesses negotiate their role in
society
In the business world, ethics is the study of
morally appropriate behaviors and decisions,
examining what "should be done”
Although the two are linked in most firms, CSR
activities are no guarantee of ethical behavior
3. Recent Evidence of CSR Interest
An Internet search turns up 15,000 plus
response to “corporate citizenship”
Journals increasingly “rate” businesses (and
NGOs) on socially responsive criteria:
Best place to work
Most admired
Best (and worst) corporate reputation
4. Reasons for CSR Activities
CSR activities are important to and even
expected by the public
And they are easily monitored worldwide
CSR activities help organizations hire and
retain the people they want
CSR activities contribute to business
performance
5. Businesses CSR Activities
Philanthropy
give money or time or in kind to charity
Integrative philanthropy—select beneficiaries aligned
with company interests
Philanthropy will not enhance corporate reputation
if a company
fails to live up to its philanthropic image or
if consumers perceive philanthropy to be manipulative
6. Business Ethics Development
The cultural context influences
organizational ethics
Top managers also influence ethics
The combined influence of culture and top
management influence organizational ethics
and ethical behaviors
7. The Evolving Context for Ethics
From domestic where ethics are shared
To international where ethics are not shared
when companies:
Make assumptions that ethics are the same
Ethical absolutism—they adapt to us
Ethical relativism—we adapt to them
To global which requires an integrative
approach to ethics
8. Ways Companies Integrate Ethics
Top management commitment in word and
deed
Company codes of ethics
Supply chain codes
Develop, monitor, enforce ethical behavior
Seek external assistance
9. External Assistance with Ethics
Industry or professional codes
Certification programs, e.g., ISO 9000
Adopt/follow global codes
Caux Round Table Principles
10. Four Challenges to a Global Ethic
Global rules emerge from negotiations and will
reflect values of the strong
Global rules may be viewed as an end rather than
a beginning
Rules can depress innovation and creativity
Rules are static but globalization is dynamic
Companies can engage in CSR activities even while they are acting in unethical ways. For example, Enron was a champion of community involvement, but used off-balance-sheet partnerships to bilk investors and eventually ruin the company. Similarly Parmalat helped many Parma people and gave $2 million to restore the sixteenth-century Correggio frescoes at Parma Cathedral. But he diverted hundreds of millions from publicly held Parmalat to family owned companies like soccer team Parma AC and Parmatour.
Companies can say one thing and do another.
Bullet 1 from Fleming, John E. (2004). Corporate citizenship revisited. AOM Newsletter, 35(1): 4.
A 2002 U.S. poll conducted by the Wall Street Journal/NBC showed public esteem for business leaders dropped following reports that companies like Enron, Andersen, and others. Fifty seven percent of respondents said corporate standards and values dropped in the past 20 years compared with 38% who said they were the same. This compares to 1998 when respondents’ reports were 53–42%. They proportionately said government should regulate business, and that has occurred, for example Sarbanes-Oxley. From: Harwood, John. (2002, April 11). Public’s esteem for business falls in wake of Enron scandal. WSJ, D5.
Corporate scandals in Japan (former Mitsubishi Motors executive arrested on suspicion of professional negligence re: defective truck parts); Citibank turfed from Japan for irregularities.
Corporate scandals also in Europe: ABB and Barnevik pay; hold kickbacks to suppliers; also make this a worldwide phenomenon.
These may be activities you’ll see in your firms.
Integrative philanthropy—Avon Products Inc. “The company for women" donates funds to breast cancer research. In Seattle, FareStart partners with Consolidated Restaurants; Pharma companies align with Operation Smile, AIDs donations.
If national practice is bribery, then most companies in that nation will use bribery.
If a top manager is unethical, then he/she sets a lead that others follow.
When managers behave unethically, employees can be demoralized, lose faith in the organization, and even leave their jobs. Others might follow-the-leader themselves and engage in unethical behaviors.
High demands for performance and profitability led Enron employees first to cut ethical corners and finally to break laws as well. According to one Enron controller, the logic was as follows: "If your boss was [fudging] and you have never worked anywhere else, you just assume that everybody fudges earnings. Once you get there and you realized how it was, do you stand up and lose your job? It was scary. It was easy to get into 'Well, everybody else is doing it, so maybe it isn't so bad.'"
Most firms are developed within a nation, borrowing their ethical practices from them.
When they go international, they face new ethical challenges.
NIKE Inc. was "founded on a handshake" with implicit belief that "business with all of our partners [would be] based on trust, teamwork, honesty and mutual respect. We expect all of our business partners to operate on the same principles."
Nike discovered that their overseas subcontractors were not treating workers with respect, and this suggests that Nike's view of these principles and what they meant did not result in desired subcontractor behavior.
Fundamental honesty and adherence to the law.
Product safety and quality, workplace health and safety precautions
Conflicts of interest
Employment practices
Fair practices in selling and marketing products or services
Financial reporting
Supplier relationships
Pricing, billing, and contracting
Trading in securities and/or use of insider information
Payments to obtain business
Acquiring and using information about others
Security and political activities
Environmental protection
Intellectual property or use of proprietary information (Business Roundtable, 1988).
Accountants have a professional code of ethics that companies rely on.
Global rules are likely to emerge from a negotiation process; they are unlikely to reflect values and habits consistent for all cultures. To the extent that these rules are developed by firms from the Westernized countries, they may not incorporate concerns for much of the world. Second, global ethics may be viewed as an end point rather than a beginning point for developing global ethics. Organizations may hide behind global codes, claiming that the absence of rules means that all behaviors are acceptable as conditions change. Organizations may/will find loopholes then use the rules in defense.
A global code of ethics also may serve to depress innovation, since some will hesitate to act in the absence of clear guidelines. However, a static set of guidelines is unlikely to keep pace with globalization.
